16 Human Resource Executive®
for a portfolio on its own to guarantee
income for life. And while most
individuals have income from things
such as Social Security, and a few folks
still do have pension income, it is difficult
to plan that they’re going to live to age
100-something. Having the conversation
or making them aware that it might
actually make sense to buy an annuity
when they retire helps prepare them
when they get there for that expectation.

Some of your research has focusedon the importance of having coremenus that offer “breadth, notdepth.” Can you explain that?

It’s kind of silly when you see some
of these [plans] that have three or four
large-cap value funds. You need to
have everything well-covered, but you
don’t have to have four large-cap value
funds, three large-cap growth funds,
two mid-cap value funds, five mid-cap
growth funds. Just make sure you have
all the bases covered, but don’t have
20 options. Make sure you have a lot
of things out there, especially on the
fixed-income side. Have international
fixed income, have inflation-reactive
bonds, but don’t go overboard having
multiple options per asset class.

One of the session takeaways listed
for your talk is: “Measure the
financial health within your plan.”
Is that a missing step for many
companies?

It’s nearly impossible to measure
financial health, but you need to
understand how your plan is doing.
Wellness is very important because
people focus on the 401(k) plan and
it’s a critical means for people to
save for retirement. Lots of research
shows that people who don’t have
DC plans by and large don’t save for
retirement. In reality, there are other
things that may be more important
to different participant subsets—
individuals who don’t have an
emergency fund, individuals who want
to save for college. Understanding
where folks are is really important
and then wellness helps them get
there. If you tell them, “You need
to save 12 percent for retirement,”
most folks would say, “I can’t. That’s
not possible.” Getting them there is
critical. Retirement is a long-term
thing; it’s very far away. Wellness
and things can really help someone
understand how they can, right now,
start making better choices.

The 2017 HRE’s Health & Benefits
Leadership Conference will be held
April 19 through 21 at the Aria Resort

& Casino in Las Vegas. Visit www.
benefitsconf.com for more details.

HEALTH & BENEFITS LEADERSHIPConference Update

to ignore it, but if you do, odds are you
are going to have a negative surprise.

What other advice would you offerHR executives?

People in HR have a tremendous
ability to have a substantial impact on
the retirement of their employees. They
need to make sure they are doing the
things that matter. People tend to be
investing relatively well. It’s the savings
stuff [that needs more attention]. You
could just ... pick any top provider and
that’s going to be OK, but you need to
make sure you are doing things like
automatic enrollment at 6 percent or
8 percent, progressive savings and
annual re-enrollment. Don’t spend so
much time on investment stuff, spend
it on savings, because that’s where the
gap is today for most folks in DC plans.

Send questions or comments about
this feature to hreletters@lrp.

A couple years ago, you wrote
a Wall Street Journal column
about your parents and how they
were role models for retirement
planning. Can you share some of
the advice that they offered you.

We all have different perspectives
or things that give us guidance on how
to make better choices for financial
planning. [My parents] were very
good about saving. They didn’t have
jobs that paid very well ... but they
still decided and managed to set aside
money to save for retirement. My mom
was a math teacher, so she could do
these calculations, so they had an idea
of what to do. They didn’t run away
from the fact that they had to prepare
for retirement. They did a great job.
They created a plan and they stuck to
it and they retired after 30 or so years
of working. Their income today is just
what it was when they were working 20
years ago. Taking that focus and having
a plan really can help you achieve your
goals. It’s like Christmas. Christmas
comes every year and people get
surprised and say, “Oh, I haven’t
saved for Christmas!” So they get all
this credit-card debt. We all know
retirement is coming. You can choose

FYI

Employers Dissatisfied with Employee Savings

Participating in employer-sponsored 401(k) plans is strong, but only 15 percent of organizations are satisfied with employees’ retirement savings rates, according to a new study from Aon Hewitt. In a survey of more than 250 United States employers, Aon Hewitt found 90
percent of these companies concerned with their employees’ level of understanding
when it comes to how much they need to save for retirement. Fifty-eight percent of
respondents said they have at least one financial well-being tool available. By the end
of 2017, that percentage is expected to climb to 84 percent, according to the study.

“Employers are making retirement readiness one of the important parts of
their financial well-being strategy by offering tools and modelers to help workers
understand, realistically, how much they’re likely to need in order to retire,” says
Rob Austin, director of retirement research at Aon Hewitt.

DOL Suit Claims ERISA Violations

The U.S. Department of Labor has filed a complaint in the U.S. District Court of Colorado against Central Security Communications Inc., its CEO Robert Millikin and fiduciary Howard Klinger to restore more than $82,000 owed to the Greeley, Colo.-based security and alarm monitoring
company’s retirement and health plans, as well as additional lost income.

In the lawsuit, the DOL alleges that Central Security Communications, Millikin
and Klinger violated the Employee Retirement Income Security Act of 1974 by not
transferring employee retirement contributions and health-insurance premiums to
the employee retirement and health plans. The suit also claims the defendants did
not collect delinquent outstanding loan repayments owed to the retirement plan. The
DOL seeks a court order that would require the defendants to restore all plan losses
with interest, appoint an independent fiduciary to administer the plans and prohibit
Millikin and Klinger from serving as fiduciaries to any employee-benefit plan.

“Central Security Communications and its fiduciaries had a duty to manageand protect the employees’ benefit plans and their assets, yet they failed to doso,” according to Mark Underwood, acting director of the Kansas City RegionalOffice of the DOL’s Employee Benefits Security Administration. “The departmentwill take every action necessary to restore plan assets that were not preservedproperly for the company’s workers.”

Facing Retirement Fears

More than half (51 percent) of U.S.-based workers cite outliving their savings and investments as their biggest retirement-related fear, according to research from the Transamerica Center for Retirement Studies. Most employees participating in the 17th Annual Transamerica
Retirement Study—which polled 5,359 workers in two separate surveys—
expressed concerns about their life in retirement. Eighty-two percent said their
generation will have a harder time achieving financial security compared to their
parents’ generation, and 77 percent are unsure whether Social Security will be
there to provide for them when they are ready to retire.

That said, the center also found retirement confidence recovering along with the
economy, with 62 percent of employees expressing confidence that they’ll be able
to fully retire with a comfortable lifestyle. Overall, 51 percent of workers surveyed
agreed that they are building a nest egg that will be large enough for retirement.

Inconsistency in IRA Contributions

New data from the Employee Benefit Research Institute finds that most owners of individual retirement accounts do not contribute to them every year, but more than half of those who do put in the maximum amount permitted by law. In a recent analysis of its IRA Database, the Washington-based EBRI
found that nearly 88 percent of traditional IRA owners did not contribute in the
five years studied (2010 through 2014), while barely 2 percent contributed in each
of those years. Close to 62 percent of Roth IRA owners did not contribute in any
year, with more than 10 percent contributing each year from 2010 to 2014. Roth
IRA owners in their 20s were most likely to contribute.

While the percentage of IRA owners who contribute to their account remained
relatively consistent across the five years of EBRI’s study, those who contributed
the maximum rose from 43.5 percent in 2010 to 53.5 percent in 2012. Increases
during that time occurred for each IRA type, with owners of Traditional IRAs
having higher likelihoods of contributing the maximum in each year. Because the
maximum allowable contribution was raised in 2013, the percentage contributing
the maximum overall fell from 53.5 percent in 2012 to 43.3 percent in 2013. But in
2014, the likelihood of contributing the maximum among those who contributed
increased again, reaching 55.4 percent.